It was raised in 1947, to compensate for the loss of the 1st Airborne Division, which had been disbanded in 1945 and the 6th Airborne Division which was to be disbanded in 1948. The number "16" was used in recognition of the two wartime airborne divisions.

The division had three parachute brigades, the 4th, 5th and the 6th, each with three Territorial battalions of the Parachute Regiment. The brigades were renumbered the 44th, 45th and 46th in 1950. Then in December 1955, the British Secretary of State for War in an announcement on the future of the Territorial Army, proposed cutting the Territorial parachute battalions by five. The reduction in strength led to the disbandment of the division in 1956, leaving the 44th Independent Parachute Group (TA) as the only British reserve parachute formation.[2]